Copy this Complete In-Depth 85%+ Win Rate Short Trading Strategy - US Investing Champion

This trade, this is $30,000 and your account was $100,000. So that's a 30% increase in a day. So that's the optimal scenario for this specific setup. My win rate is 85%, 90%. I have a high win rate like this. The only setup that I have with an extremely high win rate. All the other stuff that I'm long, I'm in 25, 30% win rate.

I operate into failure actually because a world-class trader with over 290% return in a single year in the US Investing Championships.

Everything is just a probability, there is not a certainty, all right? You can't risk your whole career in any single trade, and even 1% is a threat. As I said, I'm risking 0.5% myself because I understand the risk, and it's a complementary setup for me. I use 3 entry tactics for this kind of setup, but, uh, we are joined by the one and only Marios Damatoudis.

In this episode, he reveals his go-to short trading setup with exact criteria and steps to follow in order to create the highest probability scenario.

This has fakeouts, but it's frequent. This has good accuracy, but it's rare. So what do you do? How can we have a better frequency but also increase our accuracy? What's the secret sauce here?

People should pay attention to this because know exactly when not to trade and when to put your foot on the gas. This is a true masterclass into elite trading at its best. Only on Chart Fanatics.

From a single trade, one time for you, you can achieve 10, 15, 20% gains. What's the average benchmark gains? I think that a performance of 80%, 100% is really, really, really, really good. Okay, and you can achieve that only by—

Welcome everyone back to Chart Fanatics, the go-to channel for all of the very best strategy and concept breakdowns with some of the very best traders in the world. Talking which, today We're in an amazing studio with an amazing guest. He made 291% in the US Investing Championships in a single year. He's been trading for— coming into his 10th year now, which is absolutely phenomenal. He is someone with a professional mindset, a real love and passion for the charts. And today we're going to go over his parabolic short setup. The one and only Marios Stamathoudis.

Thanks for having me, Ruiz.

It's my absolute pleasure.

It's great being here.

My absolute pleasure. Thank you for being here. I know you made the travel over. I know we're close neighbors, but still, I appreciate you coming over. And, you know, amazing, amazing stuff that you put out to the community. You know, I've been following you for a long time, and I've been wanting to invite you on. I just didn't know where you were in the world and how we were going to make it happen, but here we are. And as I said, we're going to go through your parabolic short setup today. And you mentioned just before we started, this is the setup that can, you know, do 3, 4, 5% in a single day at times. And it's very specific. We're going to take our time today to go through it A to Z. You know, where should we start? What's like laying the foundation to begin this?

Yeah. So first of all, I would like to, you know, to lay the context of what I do, right? So I'm basically, you know, a momentum trader. Right. So I'm mainly long, you know, so I'm trying, you know, to capture not by the bottom right on some stuff, but, you know, first I want to see an acceleration in price, maybe an elevated volume and some, you know, relative strength of that asset over, you know, the indices. That just to get me interested, right? And then, you know, you overlay all these bonus factors and information. And I am to capitalize, you know, on the move that comes after that. Right. So, you know, many great moves take time, take many weeks, take many months to unfold. So I'm aiming to capitalize on that. Right. So my style is kind of, you know, I have a lot of blends and influences from other styles. So just to give you an example, I do kind of social arbitrage in my methodology. So evaluating the story and narratives, you know, in stocks and either amplifying factors, elevating the presence, you know, of a stock at its regime. Right. Like something like Chris Camillo does, right?

Yes, I was about to say, yeah.

Exactly, in a more simpler way, right? So I have elements of a growth trader, so I evaluate fundamentals, you know, the quality of them, the progression of them. I have elements, let's say, of an analyst guy, honestly. So evaluating the progression of news, right? The quality of them, if there's something game-changing, eliminating the noise out of it. You know, so I also employ techniques from, I started as a day trader. I didn't know if you know that, right? So I still buy my positions as a day trader, the same width of stop. I just let them unfold, right? Just to hit that asymmetry. So yeah, my style is kind of like an MMA kind of trading, right? It's momentum core, but I have a lot of sprinkles of other methods. Just to reinforce, you know, that foundation more. So just to get, you know, over what I do as setups and then really go deep into the parabolic short, right? So mainly I use 3 setups. I use breakouts, right? I use catalyst gaps and it's parabolic shorts. Of course, there are many branches and nuances, you know, in each of them. So let me kind of draw them out.

Of course.

Yeah. So the first thing that I do is the classic breakout, right? So I wait for the price to accelerate, as we say, right? And then kind of get into a range. It doesn't need to be a perfect triangle like these. There are thousands of variations into that stuff, right? So, you know, my aim is to buy, you know, this kind of breakout as the candle goes, you know, the price escapes that range to capitalize on the next leg up, right? And then you can have something like this. And then like next leg up. Of course, you can overlay, you know, some moving averages. You know, let's say this is a 10 moving average coming along as a, you know, surfing the price. So that's the classic breakout. So that's one thing that I do, right? The other thing is the catalyst gaps. You may know it as episodic pivots, right?

Yes.

So most of the times you have, you know, a stock that let's do a line chart, right?

Okay.

That's been doing, you know, maybe nothing, or it can be neglected or beaten down, not doing something significant, you know, for a big period of time. It can be an uptrend as well, right? But then you have, you know, some game-changing news most of the time that create a gap, right? So you aim to capitalize on the continuation, you know, after that gap, right? And this is a phenomenon that has been explained, right? Post-earnings announcement drift. It doesn't always have to be earnings. It can be stock-specific, you know, some news that are stock-specific, like a partnership, an agreement, something that materially changes the company itself, right? But this phenomenon really changes the character of that stock, right? It can be— I always aim to buy on the first day, but also sometimes it can be a delayed reaction, right? So you can have a candle, then you know, a progression. So it kind of, you know, becomes— let's overlay a moving average, right? Let's say the 10. That's coming from down here, right? So sometimes, you know, you get a hybrid of that setup with a catalyst gap as a delayed reaction, right? And then you're going to take the breakout and continue on the move, right? And these are the long setups.

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Let's get into this episode.

So these two, you know, are, are the long setups. Now, the parabolic short setup, right, is, you know, you get, you know, you might have a stock that has been going up. It doesn't need to go up because, you know, we will go deep into, you know, all the formats and all the categories of stocks that this phenomenon can happen, right? But at some point you get a really rapid acceleration, you know, in a really short amount of time, big, you know, percentage change. Yeah. So what I'm aiming to do is capitalize on the true exhaustion day. All right. On the day that, you know, can go down after, you know, this phenomenon of a climax top. So in terms of timeframe, and I'm going to explain why I want to focus on that setup today, right? So the other two setups, the breakouts and the catalyst gaps, are kind of focused on long-term, right? Capturing positions for many months or many weeks, it depends, right? As you expand your timeframe, the puzzle becomes a bit harder, right? So Yes, price action always dominates, right? Or is it, it's a primary filter, of course. But there are many, many forces, you know, that become important, you know, the longer the timeframe is. So yes, you might have, you know, you might want to do a breakout, to follow a breakout setup or a catalyst setup, but you need to understand, you know, the forces behind the stock. And there are many, right? The stories and narratives of that stock. If it belongs, let's say the sub-industry mechanics, does it belong to a theme? Is that theme strong? Is it dominant? Right? What is the Fed regime? Or what is the market doing right now? The progression and the quality of its news. Right? So, and many, many other things, the quality of the fundamentals, like the business quality, the team, do they deliver? So you see, there are a lot of forces and you need to weigh them accordingly. Because these are equally important to the price when we're talking about long-term. Because if you do the breakout short, the catalyst gaps in random stocks, the results are not going to be great. So you need that context. And, you know, of course, 2 hours are not going to cut it. We need a lot of hours to go deep into that stuff and all the nuances and stuff. But the parabolic shorts, right? Since it's more of a day trade, right? Or a short-term swing trade, price always dominates in that space, right? So you can be agnostic about the other forces that are in play and just focus on the price structure and really nail it. And I think, you know, we can go over all the, you know, details around the setup and—

Oh, definitely.

You know, so—

Yeah, definitely. Just to recap what you said and how we started as well. I love that analogy with, MMA, right? Because it's great to, of course, have a very specific niche, for example, in terms of one particular skill set like boxing. You're taking that same analogy, boxing and being great with your hands. But in trading, that MMA analogy is so true because you might be great at entries, but if you don't know how to exit, just as a prime example, or you might even be great with price action, but if you don't understand fundamentals. Exactly. You know, even if you don't understand fundamentals to an elite level or really high level, having an understanding, especially when it comes to these kind of, maybe not this particular setup as you just said, but just generally speaking, is still going to be beneficial, especially when you're talking a bit more longer term as that time horizon increases. But no, it's great because obviously the audience primarily, as I imagine, you know, are more day trading, are probably wanting to be more active. And so for us to go over this today, no doubt is going to be incredible. And I remember We're going to see examples later on, but one of the examples you mentioned was silver recently, right? So we're going to look into that a bit later on, which is going to be great. But I'm so interested, especially as you mentioned, I was quite interested in terms of, you know, how this will set up to know it's more price action based is actually very interesting to me and I'm excited for it. Where do you think we should begin next then when diving into the parabolic short?

Yeah, so I think we should rephrase what it is, right? And maybe we can mention the behavioral reason that this phenomenon exists, because I think that's important as well, right? For all the setups that I do, or I think that's a great advice actually for everyone, for every part of your foundation, no matter what you do, it's really important to understand the why behind you're doing something, especially on setups. You need to have that longevity on your setups, right? You need to have setups that, you know, you have seen that have been working out for hundreds of years possibly, right? And it's either a structural tendency of the market or a behavioral tendency of the market. So just to give you an example, why breakouts work, why are breakouts there in, you know, 100 years plus? Because, you know, it's the natural law of supply and demand. That's how it materializes, right? That's the structure of the market. You get, you know, stair steps, right? Stocks move, you know, they perform a leg up, then they consolidate in different ways. right? And then a new leg up. It's a structural tendency of the market. Why does catalyst gaps, you know, why is catalyst gaps, you know, evident through many years? What do you think? Because, you know, it's based on a surprise and surprise is a behavioral tendency in the market, right? You get a stock maybe, you know, at $30 and it might be undervalued or sorry, overvalued actually, you know, the previous day and then some game-changing news. Hits, right? It can be explosive earnings with a surprise and, you know, increased guidance. So what does this do, right? It prompts institutions and analysts, right, to run the general models, right? And reevaluate the stock. And so the same stock could be, you know, that it was overvalued at 30, could be undervalued at 50. And that creates competition. And that's why you get this character change in the market.

Exactly. And to your point, you know, we're recording this January 12th, just for everyone at home, because we don't know when this will be released, but January 12th is when we're recording this. And a prime example is over the last, well, especially this month, but just last few months, you know, you've seen like Intel, for example, with the US investing into that company. No one would have, unless you're inside, Barron Trump, as they say, might have known and positioned himself. But for the most part, the market doesn't, won't know that news until it's announced. and then that's going to create a parabolic and that volatility spike for that individual stock, for example. Then also the, as you mentioned, the theme, right? What that stock is included in is going to have that impact too. AMD, that announcement that took place as well more recently, like, to your point, these are fundamental things that regardless of timeframe or how long you've been trading, they're always going to take place. If anything, now, what would your thoughts be? Would you say now actually more than ever you're going to see them because of the nature of how fast and speed is in regards to these fundamentals, how fast it gets to, well, I guess as retail traders or traders in general, the speed of that news is actually only increased, meaning that that impact is probably even faster within the market.

Yeah, exactly. And I've noticed that, you know, if you go and study the stock market, you know, in the past, let's say 3 years compared to 10 or 20 years, the footprints are way more evident. Like the price structure, The level of volume that is elevated, right? The aggressiveness and the change of character in certain spots in price is way, way more, you know, evident now than before. And that's a good thing for traders because we need that footprint to know what's brewing inside the stock, right? And then do our research and increase that outlier chance within our spectrum, our portfolio, right? But getting into the parabolic short spot.

Exactly. Yeah.

So as I said, this, you can be agnostic of all the forces. It's price always dominates there. Again, you get a stock, right, that really, really, you know, accelerates in a short amount of time. All right. So let's discuss, as I said, the behavioral reason, because we didn't mention it, right? So if you go back in history, you're going to see these climax tops happening, you know, over and over again. And, you know, reflexivity, as Soros described it, is a reason for it. Like, as more and more people you know, have the same narrative, all right, or the same views about the stocks and act on it, right? They reinforce the trend. And the more and more people pile up, right, the trend changes in terms of volatility and the slope, right? And you get at some point that, you know, everyone is crowded until, you know, some realization kicks in, right?

Exactly.

Exactly, right? So, you know, some realization kicks in. So, you know, that's the behavioral reason that this happens. And it takes only a spark actually, you know, to make this happen. Like if you remember back in 2025 or it was December 2024, you know, I might be mistaken. You know, Nvidia CEO went on when already the quantum names were, you know, in climax top phases, right? And said quantum computing is 15 years, you know, away, right? So, you know, everything tanked, right? It was that spark that recalibrated everything.

One comment is all it takes. Yeah.

And that's why it's an important setup if we want to explain the reasons as well, right? Because people, you know, can understand, right? If they're long, right? If you're long, you know, you can know how to, you know, manage your your positions better or, you know, sell more efficiently.

So would you say almost your setups can coincide or almost kind of overlap or start to go from along your long setups to this setup?

Yeah, exactly. Like all the setups that you use create a storyline, right? It's exactly what you say because you might, you know, start a move because of a game-changing catalyst. That's the catalyst gap. You might start the position there or get the delayed reaction. Then if that catalyst is strong and more news come or the company itself, you know, has a nice composition and maybe it's amplified by the environment, then you're going to get multiple breakouts. And then if that continues and you get a great momentum leader or a great momentum move or, you know, a hype in there in terms of story, you can get these climax tops. So it's a full storyline. That's, you know, you nailed it there. So if you're already long in that kind of setup, right. You can sell more efficiently because after this, you know, after all the criteria are met and you have this exhaustion day, like stocks can pull back 30%, 40%, 50% in a day, right? So it's a really nice way that I use to sell more aggressively, you know, into strength. I usually in my system rely on this randomness of the market, right? So I mostly trail the moving averages because I want to let the market do whatever it wants to do, right? And have this outlier effect. Because if you sell massively into strength, you never have outliers. But the only time that I sell aggressively into strength is when the criteria for this setup emerge.

Understood. Yeah.

Right? So one thing is, if you're already long, you're a swing trader, a position trader, and you see something like this and the criteria being fulfilled, all right? And they're really simple criteria, but effective. You can sell more aggressively and manage your positions better. All right? And the other way is is you can actually short these moves here to capture this 1-day or 2-day, a certain swing, a big move down, right? Capture a big move down.

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The first thing that I want to discuss actually is the categories of stock that this setup emerges, right? So after studying the history, like, we can put everything under 3 categories, right? So, and this will serve as a context for later on. Perfect.

Yeah.

So the first category, let's name it categories of stocks. All right. So the first category that this setup, you know, materializes in is the momentum leaders. So you can have, you know, a stock that has been in an uptrend for long, right? It changes in that slope. And at some point it really, you know, goes parabolic in a 90-degree angle. But that can last, you know, for maybe many months, right? Or maybe one year plus. All right. So these are the momentum leaders that you actually, through many, many months, you see the slope kind of changing. It's in a long uptrend stage too, like many momentum traders call it, right? And then you get a climax top. Okay, so this we can call the market leaders. Okay, this is the first category. We know stocks, you know, around that like MSTR, Right. MicroStrategy or SMCI, you know, or UAMY recently, you know, with rare earths. All these were, you know, market leaders that went into this climax top. And usually it's really powerful if you're a position trader or a swing trader and you use this kind of setup after, you know, the criteria are met. Right. And they're really evident in this type of stocks. Sometimes it signals the end of the whole uptrend move. All right. And then stocks can go into stage 3 and stage 4. It happened with SMCI or MSTR or other stocks. Right. And in some other cases, even if, you know, they don't, you know, die right away. Right. It's usually the juice of the move is out. So you don't want to mess again with them because you really want the fastest assets out there. Right. So that's an important thing to understand in this kind of, you know, category. The second category is, let's say we call it thematic stocks. Or energy burst, random energy burst, okay? Can happen randomly. So, you know, you can have a stock that has been doing nothing, right? Or being in an uptrend. It can be stocks that belong in a thing, quantum computing names, right? AI data center names, you know, robotics, whatever thing is out there, right? And then you can have an accelerated move as we draw it above, right? And then an exhaustion. Okay. And the third category is IPOs. Like this phenomenon is really evident in IPOs, right? You will have a stock, you know, in an IPO and then, you know, it accelerates. Really massively, and then maybe you get an exhaustion day. So, why I'm mentioning all these, because this will serve as a context later on to understand the expectancy of the move of the exhaustion day.

Got you. Okay. So based on these 3 criteria or categories of stocks, it will then change the expectancy of what I would expect from that short. Exactly. Right.

So let's—

when it comes to these 3 categories, before we move on, Are these things that you will scan for and have scanners dedicated to these specific elements, or these things that just kind of are on your radar and you're slowly sort of piecing together? Because as you said, this one in particular is more longer term.

Yeah, exactly.

So that one is something you probably research and can look for. But in terms of these two here, are they, do you have scanners in place to look for these things?

Yeah, that's a nice question. So, you know, every day I go through 1,000 stocks, right? So, I naturally see them, but of course I have scans mostly to find these random bursts, right? Because on thematics, I'm going to be looking at them. For IPOs, I'm looking at them. Market leaders, I'm already looking at them for months. Or even most of the times I'm already long, you know, the market leaders and the thematic stocks, right? But for some energy bursts, for sure, I have some scans, you know, to find these kind of moves. That's a nice question, you know, for the rarity, right? Like this is the most rare out of them. Okay. Because you, every year you don't get a ton of market leaders and not all market leaders going to climactic tops. Mm-hmm. Right. Uh, so this is a more rare.

So would you say that most of the market leaders, they might not have this move, they'll probably end up ranging.

Yeah.

Any tiny sort of pullbacks and ranging versus this, what we are looking for here is so that catalyst, cuz with market leaders they'll have those moves, but they might not go into sort of that parabolic, that really overcrowded sort of feeling. They're just moving.

You're gonna see for sure. Yeah, exactly. So for sure, at least the market leader is gonna do that, right? You had Plug back in 2021 and every year you have, you know, market leaders doing that. But, you know, as you said, like a lot of them don't do it. They just, you know, die off, you know, really painfully and slowly.

Exactly.

So, I mean, the trend of it, right? So this is the more rare, the most rare. And this is the most frequent.

Okay. Okay.

And this is also frequent, but it depends, you know, on how many IPOs launch, you know, every year. Like in 2021, we had a ton of them. All right. Yeah. It depends on the year, but it is frequent as well. Okay. So these are the categories. As I said, this, you we keep it as a context for later on in terms of the expectancy of the move. So let's, you know, start with the filters that I use, you know, for this parabolic short. So in terms of the criteria, right, the selection criteria, I use two types of criteria, right? The first one has to do with the percentage since, you know, in the prior move before the exhaustion day. Okay. And the second filter that I have, the second criteria is more about the structure of the price itself, how it expresses itself. So let's start with the first, you know, filter. First filter. And we're going to call it, let's say, the percentage move. Right? For, let's call it actually in correlation with market cap. Okay. Because that's important. Why do I have this filter, right? Because, you know, if a stock has a market cap, let's say of, I don't know, $100 million, right? And you have a stock of, you know, a mega cap with $300 billion, right? Do you expect the same kind of moves, right? No, right? We need to correlate kind of the percentage move that happens before, you know, with the market cap, right? So after, you know, studying the past, I have ended up, you know, with this kind of filter. So, you know, for companies that have, let's say, less than $10 billion market cap. All right. The minimum move that I want before I get even interested in, you know, in any parabolic move, right, is at least, all right, 200% plus prior move.

Okay.

Okay. Like these stocks usually move between 200% to 1,000% or even more. All right. But the minimum I require just to get interested is 200%. Got you. And something important here for everyone. I don't track this move, you know, from the start of whatever, you know, the price action is. I track it from the last evident base. Okay. Of the stock. And that might be even the 20 moving average at sometimes. Okay. This is really important. You track this percentage increase from the last base. Okay. Do you have a question, Reece?

No, I was just gonna say, is that because you're trying to capture that sentiment, that volatility, that overcrowded feeling and get that emotion in? Because you might have 200%, but that was like, you know, really far ago. It's already kind of pumped and based and pumped and based. and then if you measure the whole move, it's 200%, but really there's no, none of that emotions involved really.

Yeah, exactly.

So if you do it from the last base, even if it's already moved, say 200% before that, that 200% from the base, does time, is time an element? Is there, you know, you want that in a quick succession of time?

First, you know, the, the answer to this is actually studying the past, right? Like, so all the filters that I use, all the numbers that I use, even though I don't like to use, you know, if, if we go over my long setups, there's not many one-dimensional filters, right? What is one-dimensional filter? 200%, an exact number, right? Okay, yeah. But, you know, starting that, and this is a setup that I've used, you know, for over 9, 10 years. I've studied a lot. So that's true what you said. And also, you know, it's adding up the commonalities of the percentage in stocks that belong to this category, right? You know, how much was the increase before the event, you know, the event happened, the exhaustion day happened, right? So you stack all this up and you end up, you know, with a number. So just to revert back, and this is something important here, the 200% plus is the minimum, all right? Some stocks can go up 600%, 700%. As you go closer, you know, 2 times the minimum threshold, let's say, or 3 times, you know, this move is considered extreme. So if you have something with under $10 billion market cap and you have a move, all right, that is, let's say, 800% or 1,000%, I consider not in my mind as extreme. Okay. And this will serve again later on. Okay. Okay. When we start adding things up.

Of course.

To understand more, you know, how much we expect from the exertion day. Right. So I can write like 2 times or 3 times the minimum threshold. That move is extreme. Okay. And we keep that in the back of our minds. Now, for something that is, let's say, 10 billion to 100 billion, okay? The minimum, let's say, move I require, percentage move that I want is 100%.

Okay.

Okay?

Yeah. Do you know, just before we move on, is there a minimum that you wouldn't touch in terms of market cap? So in terms of if it was below a certain threshold, it wouldn't, you wouldn't really factor that in?

Yeah, that's a nice question. Listen, personally I don't, because what I do like to see as another threshold or another filter, it's the volume underlying, you know, these days, right? What's the average dollar volume every day? So if it's enough, you know, for my specific liquidity, that's, you know, okay for me to go, you know, into an asset that even, you know, has a $150 million market cap.

Gotcha.

If it's moving, you know, $500 million in a day, you know, it's not, I'm not easily gonna get trapped. Okay. Of course, this, you know, things, the parabolics, right? Or either long or parabolic shorts, you know, you know, are really risky kind of setups if you don't do, approach them, you know, with elegance, right? But you only need to care about what's the dollar volume moving underlying. And a lot of stuff that have really low market caps provide the best of the moves, right? Gotcha.

Yeah.

So getting back to the second, let's say, category in terms of market cap, if something has between $10 billion to $100 billion, then the minimum move will require just to get interested. All right. And I log this, you know, from where the move started. Okay. So what was the market cap when, you know, I'm starting to see the move?

Okay.

Okay. Right. So again, 2 times or 3 times plus this threshold.

Yeah.

Okay. That can be considered extreme.

Got you.

And then we get into, perfect. We get into, you know, the larger caps, right? So if we have something with let's say, market cap, right? Over $100 billion market cap. Yeah. Then the minimum I require is 50%. Okay. It makes sense?

That makes sense. Yeah. So, you know, the more the market cap increases, the lower we need in terms of the percentage move, but it's all in correlation and sort of reflects that market cap. Because the likelihood of, say, $100 billion plus company doing 600% is going to be much smaller. Exactly. Possible, you know, in these markets in particular with any craziness, but very, very, you probably will not see that very often or if ever. But that's why. So the parabolic movement. The one question that comes to mind though, off the back of this is frequency. Would you say the frequency, my thinking just looking at this right now, would say the frequency is maybe higher here than here, or is it? Not a factor.

Yeah, I think the frequency between these two, you know, are way more elevated than this one. Got you. For sure. Um, but listen, we're not going to stop there. I think this is where most people, you know, stop and then add some simple bonus factors. That's nothing for me. Okay. Really? Because as I said, this is a one-dimensional filter. All right. And you can't put the market into a box, honestly. Things, um, you know, they don't appear the same way, exactly the same way each time. They kind of synchronize, right? So if you put a really one-dimensional filter and stop there, right? You exclude a lot of opportunities, exclude. So that's why I said the second filter is more broad. And it's about how the price structure actually expresses itself. Okay? And that's what we're gonna talk about, right? Without the second filter, I'm not even touching. I don't care what is happening before. The stock can move 1,000%. If it doesn't show me the structure that I want to trade, I'm not touching it.

Okay? Okay. So even with this filter, without the second filter, no trade.

That's why we have these two filters. All right? It's about the second filter. Price structure. Okay? And this is really important.

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As I said, after deep diving into the past and trading, you know, all this kind of stocks, I kind of boiled down all of them into 3 main categories, okay? And I gave them kind of names. So, All the parabolic phenomenon, you know, phenomena will mostly express themselves in 3 structural ways. Okay. And it's really simple, right? The first, I call it the ants, right? Let's call it ants. So you got a lot of, imagine this is green, right? A lot of green days, you know, one after the other, but they're, you know, really small with you know, really small ranges. Again, I'm talking about of all the ways that the parabolic phenomenon expresses itself, right? So that's one way. Now, if something like that happens, again, to rephrase, a lot of days consecutively, okay, but really, really small days. If that happens, and let's put a small x here because I need to say something more. If that happens, even if the minimum threshold, let's say, is is already there. Let's say that's the minimum threshold we had from here.

Perfect.

All right. I'm not going to touch it. I need something more. Okay. The second way that the parabolic phenomenon expresses itself is what I call green-red. Okay. So let's use the red market here. So you can have, you know, green days. That get interrupted, let's say, by some red days.

Okay. Okay.

Right. This is in terms of frequency. You know, these two are the most frequent. This is the most frequent, but you get combos as well. Okay.

Okay.

So you get some, you know, down days and then the phenomenon continues. All right. So this is the green-red. So let's say even if the minimum threshold is here. Yeah. Okay. I'm not going to touch it again. I need something more. And there's a behavioral reason. Of why I'm not touching it. And it's easy to find, right? These are simple stuff. Okay. So I'll put a small X here. The third expression, and as I said, you can get the combos, right? Something can start as a green-red and then, you know, continue as ants, right? Or you can start as ants and then continue as green-red.

Got you. Yeah.

But the true one that I'm truly interested is a textbook, all right? And what's a textbook? You know, you get really big days, really big green days. It might have gaps as well. Okay. Really evident with massive ranges. Okay. Okay. This is where I get interested. Let's say this is the minimum threshold. Yeah. I need at least 2. I never short on the first day. I need at least 2. Most of the times it's between 2 and 4. Really big, massive days with really, you know, big ATR, all right, range. So that's the only thing that I'm interested in. Now, here's the question, all right. And I think people should pay attention to this because, you know, they see the move, they see something like this and they go short and they get trapped for many days. I've seen, you know, the parabolic cutting the tops. Generally, it's a hard thing to do, right? Like people are getting called market wizards for that stuff, right? Or whenever I post on Twitter, right? Like, how did you know that? It's first grade stuff. It's just, you know, candles and structure. It's really easy, but you need to have, you know, some nice filters. And you don't want to get trapped because being trapped on a short is a, you know, a potential limited loss. And then you can have a gap up on top of that and you can be destroyed. So something important that I can mention later, but it's good to phrase it here, is for this specific setup, you need to be extremely strict with your criteria, respect them, all right? And always have a time window. Okay, I will explain what a time window is a bit later. So let's get back here. So a lot of people, you know, as I said, start, you know, shorting and get trapped into these moves. This is the one that I'm interested in, right? But in terms of rarity, And here's the problem. Okay. This has fakeouts.

Okay.

But it's frequent. Okay. Okay. Again, this has fakeouts, but it's frequent. This has good accuracy, right? But it's rare.

Gotcha.

So what do you do? How can we, have a better frequency, okay? But also increase our accuracy. What's the secret sauce here? It's really easy. I think you can think of it. It's extremely easy. It's so funny that it's so easy, all right? And we can go over the examples and you will be amazed of how you, you know, this kind of small tip, which is extremely easy, you know, helps things out. So is there a way to, because I don't, you know, I can't rely only on the textbook, right? You can't rely on the outliers only. I mean, the textbook setups, okay, they're rare. You need some frequency. So what do we do? So I'll reveal it, all right?

Yeah, I was getting heart palpitations. I think I was getting tested.

No, it's really, it's so dumb, honestly, but it's really effective. So, you know, let's say you have something like this, all right? I'm just gonna redraw it.

Yeah, of course, yeah.

Okay, so let's say you start with something like an AND, okay? And as I said, I'm not— I don't want to do anything on that before we reveal it, okay? Why do you think I'm not interested in this and this? There's a behavioral reason, right? So if we— as I said, you need to understand the why behind the move, right? So this whole phenomenon is based on the release of pressure, the massive release of pressure, right? For the stock to move down massively in the day. That's what you want to capture. So you see these days, right? Who's behind some moves? Of course, there are retails, institutions, different blends of this. But here the action, right, can be masked.

Okay.

So institutions, let's say, have many days to adjust, to sell, to mask their behavior. right? Yeah. And it doesn't show in the price action.

Okay.

Again, here, right? You get a few days up, then you have a small release of pressure. You have time, you know, to adjust. Here, no one has time to adjust. Yeah. Everyone is drunk, dragged into these amplified emotions, right? No one has time to really adjust. Everyone is being trapped, right? And then you have the massive, you know, release of pressure when it happens, right? So that's why behavioral, I don't want this. Gotcha. So what do we do? We want to increase our frequency and also our accuracy. So let's say this is the minimum threshold as a first filter. We need that first filter. Okay. Even if you have this alone, I don't care. Right. You need both of the filters.

Yeah.

Okay. I'm only interested in hybrid setups. Okay. So you wait for elements of the textbook. All right.

Okay.

To be revealed on these two that are really frequent in order to get interested. So imagine having something like this and then boom, boom in two days.

Okay.

All right. It's really, I told you, it's really simple. All right. Or imagine having something like that. Okay. Right. The green, red, and then you get, you know, two massive days. So you wait for elements of the textbook to be materialized.

Is this still on the same sort of timeframe or would, to do that, would you then adjust timeframe?

No, it's all, it's everything is based on the daily timeframe, right? So you wait for the daily candles, you know, and see the structure there. So even if it is done, this is my simple workaround to really have, you know, increased frequency and increased accuracy.

You still need the minimum 2 days?

No, no, here you can wait, you know, maybe for 1 day of, Big expansion. Okay. Okay. 2 days is even better. Like I want, you know, most of the times, that's why if you see many of my posts that I write before, you know, this phenomenon or when it's developing, I give a time window of 2 days. I say today or tomorrow, right?

Gotcha.

Tomorrow, the day after tomorrow. This is the time window that I give because, you know, sometimes you have one day, you want some extra confirmation. For other stuff, there are more bonus factors that we will discuss, right? But this is my little hack to actually get it right. Right. So, uh, if we open one example, right, before we, uh, you know, uh, reveal some bonus factors as well, you will see how this helps, uh, with moves that happen in the past. Right. So let's, let's jump into one example before we add some bonus factors if, if it's okay. Sure.

Yeah. Why not? Why not? We're doing something slightly different today. We're gonna continue on the whiteboard shortly, but we are gonna show this example now. And see how this develops and how this filter actually looks. And then we'll come back to the whiteboard. So we're going to go on the screen and just see an example of this now.

Perfect. So one of the examples that I wanted to show you real quick and everyone is SMCI, right? Which everyone was following back, you know, in 2024, early 2024. So you got this, you know, kind of breakout after You know, a big range. This is where I actually, you know, went long myself, right? So notice the price action before this, right? So in terms of the categories that we were talking about, where does this kind of fit in? You have a move that's been, you know, in an uptrend for so long, changing slopes. Yeah. So it's the market leader category that we discussed, right?

Exactly. Yeah.

Now let's start adding the first filter, right? So what was, and again, I said that we track the acceleration from the last base, right? So the right way to track it is from around this zone. That's correct. Am I correct? Mm-hmm. Okay. So you don't have to be extremely accurate on that stuff, right? Just notice where the base is and start, you know, noticing the acceleration. Now, the first filter we have is the price acceleration relative to the market control, right? Exactly. So SMCI, Super Microcomputer back then, and this was a market leader. Everyone started in all this company, right? So I was alone myself there. But, you know, in terms of market cap, this belonged, you know, I can reveal it to you just to make it easier in this kind of category, right?

Okay.

That between the $10 to $100 billion market cap.

Okay.

So what's the minimum requirement that we have when we move around? This is 100%, right? So I'm not, you know, I'm not looking to do anything. If we have 50%, 60%, 70%, 80%, I don't care. It has to hit that minimum threshold just to get me interested into seeing, oh, you know, something might happen. And remember, I was already long, right?

Exactly. On that stuff.

So let's zoom in a bit, actually. So let's start, you know, this is, you know, the price action that we're tracking, right? Yeah. So let's start, you know, from the last base, which is this mini base, right? As we said, the minimum move is around 100%, right? That's right. Have we got that? If you see the small column on the left side, you see that it's 70%. So, you know, are we interested yet? No, the minimum threshold is not yet passed. And in terms of the structure, where this belongs to, you know, in terms of—

Green to red at that point?

Exactly, right? It's a green to red. So first we try to evaluate the first filter, right? So let's first hit that 100% mark. Okay. Yeah. And this is where we hit it. Like, this is the minimum threshold here. Okay. Around here.

Got you.

And still we are in this green-red, right? So if this green-red continues without, without hub, do you see any, let's say, let me zoom in a bit more. Do you see any crazy big candle expansion, gap-ups? Do you see something crazy or is it kind of the same? You know, of course you have many candles. This was the breakout candle here, right? But do you see anything that is really different in terms of character as a structure in the price?

No, massively just that one larger green candle where we hadn't even hit the 100% yet, right?

Yeah, this is where we hit the threshold. So again, if, you know, we don't get elements of the textbook as we were discussing into the, you know, the green-red or the ANTs. I'm not interested even if we're above the threshold. So let's continue. And I will let you tell me when, you know, you see it. All right.

Okay.

So let's, many people were trying to short here, here, here. It's extended, it's extended, it's extended. And this, you know, cycle was continuing. So is that, you know, something big? No, no.

Starting, I would say.

Yeah. But nothing. Not yet. Now it turns into ANTs, right? 10 Gbps.

Exactly.

But, you know, it takes time to see it, you know, to really see it. But again, we don't have anything crazy yet. Yeah. But now you get a gap up, right? And the gap up is, you know, you can consider this as, you know, a candle up until here, right? Because there's price action in the gap. And we are here. Now, do you see an extension?

Yeah, now we see.

Okay. So if you see up until we had, up until here, let's say we had green to red, then some months, right? Do we now have elements of that textbook?

Oh yeah, yeah, yeah.

Into—

that was the interesting thing. So when I said, oh, we're starting to see it, it's because, and this is like great, no doubt, because other people might have thought the same and that's probably where they go wrong. 'Cause they're jumping in and trying to jump the gun, but just because of like, okay, we gapped, but yeah, okay, we gapped, but what was the—

that's good.

Was there pressure? As you mentioned earlier, like where's the pressure? Is the pressure starting to get overloaded, overcrowded? No, right? We already gapped a little bit, but the candle is later.

That's one candle, you know, that expresses somewhat the textbook characteristics. We need one more just to be more sure, right? So here, again, we're talking about probabilities. Nothing is a certainty, right? All that we do as traders is play around with probabilities. But here everything is fulfilled, all right? In terms of these two filters, and we will add more bonuses. Okay? Because there are more bonuses in the latter scenario. Other stuff, MSTR, you know, and other stuff. So if you were looking at this and you can say, okay, I have the first filter and the second filter fulfilled, can I take advantage of the next day as a short? Okay. What do you think? Would you be wrong? Would you be right? Would you want one more day? And tell us all. If you were long already, sorry for interrupting.

No, no, sorry.

If you were long, Since everything is fulfilled here, would, you know, selling something, not specifically on this day, maybe you can wait for the next day, all right? For the intraday characteristics that we can discuss for that setup. You can sell more effectively. Look what happened. Okay, boom. Yeah. Okay. And let's look at another example again, really, you know, quickly, you know, and continue with something that happened more recently, okay? And the examples are endless. Like, we can sit here all day and do that stuff, all right? Now, look at something like this, okay? Again, you have a long-term uptrend that lasts for over a year. The slope changes, right? And then you get something. You can go and, sorry, these are my notes, you know, from other stuff. Look, that's interesting. Do you see that here that I say maybe this is the last move?

Yeah.

Just show it, okay? So, you know, because I was expecting like stocks, we can mention it here, like stocks that are in stage 2 and are leaders, you know, or momentum leaders, they usually last in that stage 2 for, you know, the best of them, 2 to 2.5 years. Yeah. Some more average, you know, 1.5 to 2, okay? So, you know, if you go into this price action and this trend, you know, I was expecting probably this time, but maybe I should capture this last move because it might be the last of the uptrend, right?

Understood, yeah. So in this case, when you're talking about the base, would it be, what would you class it when we had that pullback and those consolidations?

That small base here. You can start dragging it from that small base.

Understood, yeah.

Most of the time, if you want to be more accurate, you can track the 20 moving average, as I said. Okay.

Okay.

So, you know, but in terms of structure, okay, because I don't want to overdo it here. In terms of structure only. Now, do we see elements?

At that point, I would say yes.

Yeah. Right? Elements of the, you know, the actual—

Filter for this one, what would it be in terms of our market cap to be presented?

For sure. So the market cap was really low, right? So what do we need is at least a 200% move. Okay. The most effective way you can track the prior percentage move, okay. As I said, it's from the last big base. That's what, you know, I do more times. So the 20 moving average, the 20 moving average serves, you know, as a good proxy. Okay. Now, so you can start tracking it from here, let's say.

Yeah.

Okay. And up until here, you know, we're close. Okay. If you track it from the 20 moving average, which is this yellow line, were already in that threshold, right?

Okay, understood.

So myself at this point, right? And this was, you know, a more illiquid name, right? I would say, okay, one more would make it better, right? But I'm saying, okay, these criteria are getting fulfilled. The structure for sure, right? If we track it from here, it's already fulfilled. One more day would be awesome as well, right? It doesn't mean that it can't work the next day. You just add bonuses, all right? And you see, where did it gap up? Okay? Like, if we track it from here, probably the minimum threshold is already in. So you see that? Even from here or here. And then, you know, because this was a long-term uptrend, this actually was a stop of the uptrend. So imagine being long here, all right? This would be a really nice sell just because this criteria was fulfilled.

So even in one case, even if you're not going to short, let's say you don't want to take the risk of shorting, especially because, you know, you're trying to short essentially the top using this setup, the very criteria alone allows you to manage your long positions with a lot more accuracy. Exactly.

And that's why I wanted to showcase, you know, my kind of criteria. That's the— don't short it, okay? Shorting is more painful. You can be trapped, okay? You can make a lot of money, of course, okay? Because it's a really powerful setup. You can make 5, 6, 10% in a day. Yeah. Okay? And we can actually do some market replays later on to actually do one, you know, trade together from the past. But, you know, if you don't want to short, all right, and don't carry that risk or that stress, if you're long, all right, just use it to manage your positions more effectively. That's why, you know, I think it's important. And forget about, you know, long-term momentum moves. Let's take something, you know, as a theme, right? As we discussed, another category is the thematic stuff, right? Yeah. Okay. So Quantum Compute, I was in these moves, right, on Quantum when they happened, you know, the previous year, right? Back in December 2024. This was a really strong theme. It started with IONQ, right? And then you had Racketi and Qubit and all that stuff being accelerated. These are the themes that we're talking about, right? But at some point, right, you see something like this. Okay? So I was in that stock, right? And what's this move here? Is it the, we said we track this from the previous base, right? Yeah, exactly. It's the textbook, the minimum threshold because this was, you know, it was in the category of less than $10 billion, right? Right?

Okay, got you.

But the minimum threshold is here. It's already passed. Yeah. And this is the perfect textbook. Okay. So what do you think? Can we sell? You can sell some portion on this day, but more effectively you can wait on the next day on the criteria that you actually short intraday to sell. Okay. Would it be wise? Probably. Okay. So you see it again and again. And as I said, it doesn't mean that it will land the move. Okay. Because again, I traded quantum names later in 2025 again, okay? But it can stall a move for a long period of time. So look what happened. And then it's when NVIDIA CEO went and said, you know, quantum computing so far away, and then you had the gap down. So you see this, like the market is so beautiful, right? Everything is connected. Certain news, certain events come at certain points. It was when we had this climax top, you know, that this happened, right? And it had an effect. Like if the same announcement came here, probably wouldn't have the same effect. Of course, yeah. So we can go back, discuss some bonuses, and then get back into some examples to start adding bonuses.

That's true, yeah.

And then go into the intraday action, all right?

Amazing, yeah, sounds perfect.

Yeah, so now let's add some bonus factors that increase the chances of this happening, right? So imagine you have The first filter passed, right? Then the minimum threshold, and then you have the structure looking the way you want it, either the textbook or the hybrids that we have here, right? Now let's add some bonus factors that, you know, increases the chances. Again, nothing is a certainty. Don't take, you know, you can't imagine how many times everything is fulfilled and then something fails. You need no ego on that stuff, right? It's yes, elevated probabilities for sure. I have a high win rate. Like, this is the only setup that I have with an extremely high win rate. All the other stuff that I'm long, I'm in 25-30% win rate. I operate into failure, actually. But since this is, yeah, because my system is based on asymmetry, right? Extreme reward to risk at the expense of win rate. Okay. But for this specific setup, my win rate is 85%, 90%. But again, it's more rare. Like, you get, 10 extremely good opportunities every year, then, you know, 10 more mediocre. But again, you capture 3%, 5%, 6%, 8%, you know, every time. You know, it compounds, right? Only from one setup, right? In your toolkit. So getting to the bonus factors, the first bonus factor is actually the volume. All right?

Understood.

So, and you might have heard this, you know, from other guess probably that when you get that really big volume, the highest volume over one year or over one period, this is really, you know, important because it really marks down, okay, the crowded behavior. Okay, you get the extremely big volume earlier in momentum moves. That's really good because institutions are piling in.

Okay.

But when you're in climactic tops and you see just really big volume, that's Actually, it's the reverse. It's extremely crowded behavior and just you need a spark for everything to unfold. And usually retail traders are the last to join the party. That's the bad. Yeah. Okay. So imagine you have something like a hybrid as we discussed. Okay. I'm just going to take the ants here.

Yeah.

Okay. And then you have, as we said, extreme big candles. So you get the textbook characteristics into the ants. All right. Now, below, I'm going to do some volume handles. All right. So imagine the volume is like that for the days. Right. And then you get something like this. Okay. And this might be the highest volume over 1 year. Okay. So this is a really, really big bonus factor for for me. When I see that, everything, you know, all the chances increase. Okay? And we can go back into examples to see that unfolding, right? Because it really, it really is a footprint of quality behavior. It's an extra thing that I want to see. Okay? This is the first bonus. All right? So let's discuss the second bonus. Which again, everything is easy. Nothing is hard here. Okay? The second bonus is whole numbers, okay? Or psychological numbers.

Understood, yeah.

This is really effective as well. So you might have, let's say a stock trading at $230, right? The first time it's gonna hit the $300. This is a psychological level, right? And $500 is an even bigger one. Of course, yeah. So psychological levels play a big role. It depends on where the stock trades at, like something that trades you know, $5.3, 10 is a nice number, right? Of course, yeah. Something that trades, you know, $850, the 1,000 is the number, right? So, you know, let's say you have a yen beyond just to make it uniform. Okay. Now imagine you have a stock trading at $250 and this is, let's say, $250. That's, sorry, let's say $243, right? Yeah. Versus having something, VS, let's say something that this is the first time it reaches the $500 mark. This is a psychological level. Okay. And you have to understand like most of market participants, right, are investors, right? Or, you know, there are funds like the psychological levels exist, right? That's why whole numbers, no one, You know, if you enter the stock at $3.50, you're not gonna sell at $22.38. Okay, you're gonna sell at maybe, you know, as it approaches $30, as it approaches $40, right? So there is evidence in these psychological numbers. So let's start adding these bonus factors again on SMCI that we did before, right? To see if everything gets fulfilled again, and if we have any of these bonus factors that would, you know, tell to you that, man, maybe this is the day. Right? So let's jump right back in. Now let's continue. We agreed before that, you know, this looks nice and this day looks even nicer because we have the textbook elements into the, you know, the green, red, and tans later on. Okay. And also, right, we're way above the minimum threshold. We actually getting into the extreme zone, if you see. Because we're well, you know, we're closer to times, not extremely, not the extreme of extremes, but, you know, more elevated, right? And as I said, this will serve later on. But what do we see on the dollar volume underlying here? Is that the highest volume ever? And if I go back into, you know, probably years, okay, you will see that this is the highest volume, dollar volume ever, right? Yep. For at least the recent years. Now that's one thing. And it's not only the dollar volume, it's the actual volume as well. Because dollar volume is volume multiplied by the price itself.

Okay.

So it makes sense to be increased. But it's the volume itself as well. Okay. Meaning the shares that are being traded. What else do we have? Again, this had a stock split, right? So this was priced at around, you know, 10 times more in the past. Oh, wow.

Okay.

But even if we don't treat it like that, exactly where, or, you know, close to where everything is fulfilled. We get, you know, the structure that we want, we get the threshold that we want, we get the bonus volume factor. Do we have anything else in terms of—

$100?

Yeah. The first time that it reaches a psychological level, a big psychological level. Okay. So the chances of something like this working out are really elevated.

Okay.

And that, again, just to see, this is what happened. Okay. And just to educate a bit more, this was a long-term move that lasted for, you know, more than 1.5 years, right? And this was the end of the juice of the move. As I said, it's not worth messing around. Yes, it went a bit up and look at what happened afterwards. Nothing, nothing, nothing. And then it died. This actual parabolic move was the end of the momentum. —about space, right? So you see how effective it is for everyone, like, to incorporate these elements into their approach. Someone can stop looking at the stock after it, you know, solves this. Okay. Someone—

There's just like two important elements. Like, one, the importance of having these filters, not just the bare minimum of, oh, we've had a parabolic move, and therefore, as soon as we look for, you know, the first signs of selling pressure, we sell. The importance of these filters allows you to get more accurate. More confident, and essentially have a hopefully higher— that's where the higher win rate no doubt comes in as well. But equally to your point, it helps everyone. So even if you're not a short trader or you're not interested in trying to short, that long trader allows you to start identifying, because the similar approach, right? When we short the top, it's risky, but it's also hard to know when to exit the top, because again, there's nothing to go off from the left. But in this case, when you start having these filters, just on a long perspective in terms of management, it helps everyone. It allows you to have more confidence. It allows you to confidently start to scale out, you know, and feel good about doing so because you know you've had these filters in place. But the second element I was going to say was in regards to people who rush, right? People who allow the— again, it kind of goes, the whole element of this is allowing that pressure to take place. But that pressure could also get to a lot of traders where they start to jump in early, mismanage, jump in late even. But that's why having the criteria, the bonus criteria, every element of what we've gone over so far allows you to have that calmness, that clarity, rules to follow, to execute. And don't get me wrong, we're all human. So even if we have rules, no doubt we try to break them here and there. We let the emotion get to us, but The whole point of this process. So anyone watching, no doubt, it's easy to think, as you said, easy and simple rules to follow, but you have to follow the rules. You're not going to generate the result unless you are able to take these rules on board and actually follow them. Make sure the boxes are ticked before you start to, as we start to move into the sort of intraday and how we're entering, et cetera. 'Cause even there, there's going to be rules, no doubt. Sure. Yeah. Filters that we have to follow. But again, you have to be able to follow them consistently, and actually, you know, take those steps. And I know that sounds simple, and it sounds obvious as well. But I just want to really highlight that, because, you know, you've no doubt had to put in a lot of work in order to get to this point where you've identified these filters and rules. And it's easy for people to think, oh, let me copy and paste that, you know, let me— this seems simple and easy. But that discipline, and that patience, to follow and wait for the criteria is what gets you paid at the end of the day, right?

Exactly. This is, you know, a really important topic, Ruiz. And, you know, as I said, in this specific setup, and we can talk, you know, later on of why maybe I transitioned from day trader into swing trader. Of course. Maybe it's not the Chart Fanatics topic here, but we can go deeper, you know, in a different time. But, you know, I wasn't following so much my rules. Okay, so I try to find a system that hedges against my bad qualities, let's say. But for this specific, that is a more day trading, you know, thing to do, all right? Certain setup, precision is important, accuracy is important, okay? So waiting for the criteria to be fulfilled, being strict about them, and having the time window. If you go on all over my post that I mentioned on Twitter, okay, before during this phenomenon before the exhaustion day. Okay. And I can send them to you, right? All of the data say maybe today, I'm interested today or tomorrow, tomorrow or the day after tomorrow. I always give this 2-day time window, you know, because I don't want to get obsessed over something. Okay. This is really, you know, can impact your ego because you want to be right. It's a setup that has high win rate. So you are used to being right. Yeah. But the one time that you're not, you're not going to be obsessed about this. Okay. So I give a 2-day window. Yes, everything should be fulfilled. If it doesn't work out, then I write it off. Next sticker, I don't even, you know, watch it again. And I've been 10 years into the game and I kind of know how to channel my emotions. But even I use this kind of, you know, criteria to say, okay, I write it off, 2 days, that's it. Of course. All right. So it's really important to follow. Things to the T regarding that setup. Okay. For other things, you can be loose. Yeah. For all the setups that I discussed, the breakout setups, the catalyst gaps, I can't be wrong 15, 20 times in a row. Yeah. Because it's one trade that can give me back 30, 40, 50 hours. Yeah. Right. There's so much wrongdoing, so much mistakes. I can, you know, not be precise, not be accurate, be drunk and trade, honestly. All right. And be cool with it. That's something that, that's why I developed, you know, into more of a swing trader to allow this thing, okay? And I love day trading as well, okay? That's why it kept so many parts. But for this, you know, you need to be accurate. Of course. And just to do one more example, just to not stick only to SMCI. Okay, yeah. Yeah, just let's do MSTR that a lot of people were tracking, you know, just to see that this is universal, okay? And as I said, the examples are countless, okay? So let's go into MSTR. Actually, I kind of revealed That's my bad. All right. It's okay, Nepo. Again, we have a move that has been going for long again. All right. Do you see the slope changing? Changing. Okay. And then we start getting into, you know, what's the last time, the last touch out of the 20 around here, right? Yeah. Okay. So up until here, what's the minimum threshold we have? I need to remember the market cap. I think it was between 10 to, when the move started happening between 10 to 100. So we're still in the middle. Yeah, we're still within that, you know, 100% minimal requirement, okay? So you will see that we don't have it yet. Like even we track it from, you know, the last base here, right? It's not that we have the minimum required yet. It's still on 80%. So even if we have green, red, green, red, and still these slopes, you know, seems to accelerate, we're not there yet. We're not even in the first filtering yet. Okay. And we don't have, we just have the green, red. So let's continue a bit, all right? Now we have another base, okay? Now do we see elements, let's say, of the elements of the textbook into the, you know, the green-red that we have? Some, right? Some, yeah. So yes, there are increased chances of this working out here, but we have a new base, okay? So we can track things from here as well.

So we have that starting to see pressure, but we don't have that 100% yet from that base. Exactly, right?

So yes, you can say things can unfold here, but you can be more patient around these levels, all right? So now again, from this base, we're starting, and we updated the market cap. Now we're in a different category because we went— Oh really? Yeah, so— 'Cause it moved? Yes, the minimum here is less now. It's 50%, okay? Okay. So what else do we see around these levels? Is it yet perfect looking? Not yet. Okay. We have accelerated move that is happening, right? We have, you know, better ranges candles. We have big volume. That's good. All right. So when I made, and I was in this because I was long on this. All right. Got you. When I was, you know, here, I said, give me one more day just to be more sure. Give me something else. All right. I don't want to close that, you know, so early. All right. So then I have this. Okay. So I gap up. You know? And what else do we have? If you zoom in.

We tap the 500.

We tap the 500. And the volume is really massive again. Okay. And we have 3 days in a row that this is the textbook as well. Exactly, yeah. Okay? And there are big range and the slope is 90-degree angle.

Do you know these red days that happened after the original base that we looked at? Would you class that as another base or no?

Do you mean this?

Yeah.

No, no, because as I said, the good proxy one uses is 20 moving average as well, right? This is the 20. So I can start. Looting from the last base out of this, all right? Yeah, got you. And we are in the extreme as well because on the new updated market cap, yeah, okay, that we recut the 50, now it's 120 from this base. So we get into the extremes. So that's the next thing that we want to discuss, the expectancy of outcomes. But if you are here, okay, just to not get ahead, can you say maybe I can sell something in the strength, all right? I may not sell everything because, you know, I still want to respect randomness. Or if you were a trader, you can say, I'm really paying attention to this to maybe take advantage of the next day. The next day or the day after tomorrow. After that, if it doesn't happen, I just write it off. Or just give me again the same everything again from scratch. All right? Boom. All right? So you see, it's so dumb criteria, so simple stuff, but it's really effective. And what happened? Again, this was a move. This was 2024, you know, late. You had a move that was, you know, going for long. So what do we say? The last timing of the move, if this happens from crowd behavior, this can mark maybe, you know, the end of the momentum, right? It doesn't mean that it can end the uptrend, but it can end the juice. So let's see what happened in MSTR after this. Do you see any Great leg up that came after. I mean, really big, crazy. You know, look at this here. The price accelerated from 115 to 500. Exactly. You never see that. And then—

And this is long periods of time as well, right? This is essentially a year. Yeah. You know, we don't see that all-time high or any sort of momentum or volatility and the volume as well.

So that was a stage 3, as momentum traders call them. And this was a stage 4, right? So this marked the end of the whole move. So you see again how this is helpful, okay? To learn this criteria, to monitor stuff. It's not only to take profit from, but it's also to learn philosophically market structure. Yeah. So take advantage of selling. It's also shorting, okay? And going back to SMCI and then, you know, review a bit more things. There are so many ways to take advantage of this phenomenon. All right. Like, I don't know. Some people might use options, right? This phenomenon emerged on Friday. So this was the day that the options were expiring on Friday. Exactly, yeah. Okay. So I remember, you know, someone, when I mentioned it before, because I mentioned it like SMCI is looking, I was long, remember? SMCI looking parabolic, I might shift gears, you know, the next day, this day here. Okay. And, you know, I remember seeing people post the, you know, the out-of-the-money options that, you know, this day that were up. You know, 24,000%. So that means for this specific, it doesn't happen always, right? But this happened on Friday. That means if you risked, let's say, $1,000 on an out-of-the-money option, but still within the expectancy that we will discuss, okay? Let's say the 90, right? That went 240 times. $1,000, you make $240,000 in a single day from just this phenomenon. So that so many ways to play around with that stuff. Again, this is an outlier. That happened on Friday. But, you know, you can—

They're the things as traders, you know, options or not, they're the opportunities you have to identify, right? That's our job. They're outliers, but that's our job. Our job really is to hunt for them. And they, as you mentioned, they might not happen frequently, but they're the things that can really adjust your trajectory as a trader. Right. Exactly. They're the things, especially for undercapitalized traders, they're the things you need to find. Right? Because obviously there's no sense of rushing in trading. Ideally, there's no sense of rushing or trying to make money aggressively. But at the end of the day, that's why you're in this game, to try and make money and to scale, right, over your career. And especially when you're undercapitalized and not new, but relatively early in your journey, they're the exact positions, they're the exact moves where everything overlaps. So like that Friday element, with the options, no doubt helped for this move to take place.

Exactly.

In its aggressiveness. And whether you trade the option or not—

All the dynamics emerging, right? And overlapping one after the other.

And this is why I like to highlight, and you can really sense it from your explanation and breakdown of everything today, but this is why I always try and highlight, you have to have a passion for the markets, regardless of the type of trader you are, day trader, swing trader, stocks, options, futures, it doesn't matter. It all boils down to having that real passion. And what I reflect passion as is understanding those elements. Like a lot of traders who might be new, who all lack that passion, they'll just be looking at this chart, trying to understand how, where do I find a trade? Or, you know, just looking at price action, for example, that very one-dimensional, very just surface level is what I call it. Those who really exemplify and grow as traders and really hit much higher levels and really essentially achieve the goal that most traders are looking for are the ones who are going into the depths and understanding the different layers and nuances, as you mentioned. Like, just the options element there alone shows that deeper level of passion for the markets to understand exactly what's going on and how can you capitalize, what are the different elements here that are at play that will affect this chart, stock, ticker, whatever it may be that you're trading. But you can really sense that just from the explanation and breakdown we've seen today, that you really have that passion, and understandable as to why you get the results that you do.

I live and breathe for markets, man. And, you know, thank you for saying that. You know, we all start for money, right? Exactly. Everyone starts for money. But at some point you need to develop that crazy obsession over the markets. And it might be, you know, different kind of obsession. Someone might be obsessed with deep analysis and, you know, understanding complex puzzles. Some might have, you know, obsession over extreme accuracy. That's why you need to find what suits you as well. But you're never gonna get far without obsession. But if I had to say one thing here is you have to find ways to keep that high level of obsession and studying the past and, you know, refining your skills with living life as well. Because, you know, I really regret some, you know, years of my life that I wouldn't be here actually, you know, without level of obsession. But as I grow older as a person and as a trader, you know, you need to keep that high level of obsession, but living life as well.

Exactly. Yeah. No, I couldn't agree more.

So, getting back into the whiteboard, right? The last thing that we need to discuss is the expectancy of the move, right? So in contrast to longs, in this specific move I have, you know, an expectancy, all right? As I said, on the longs, I visualize what can happen, but I let the market do its thing. I let randomness do its thing. Since, you know, and on short it makes sense, right? Something can go down max 100%, right? Let's say bankruptcy. But on longs, it can go up infinitely. So on shorts, it makes sense. And based on historical observations, and just for the safety, as we discussed, for the risk of that setup being cropped in. To have some sort of expectancy. Because how expectancy helps is, you know, let's say everything is perfect, all right? As I said, not everything is perfect in the markets, right? But let's say the criteria are there, right? Yeah. You might have a gap down the day that you absolutely want to short the setup. So if it gaps down, you know, big and it already covers the expectancy, should you go in? No, because most of the move is already captured. Or another thing to think about the expectancy is the width of your stop. So let's say you want to short that stock, right? And your expectancy is, let's say, a 20% drop. But your stop, let's say percentage-wise on that day is 10%. It's only a 2:1, you know, trade. So would you risk being trapped or, you know, have all these risks just for a 2:1 trade? No, you want this. 5 to 1, 6 to 1, 7 to 1, 8 to 1, 10 to 1 if you can, even from a single day. Okay, you need that asymmetry element even here that is compressed. That's why we introduced the expectancy of outcomes. All right. So now we need to merge everything we learned. Okay. Expectancy. Expectancy of the move actually, sorry.

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Now let's get back to the episode. So back when we discussed the categories, right, we said that, um, we have the market leaders. Yep. We have the thematic or random burst IPOs, right? And the IPOs. Now, by going back in history, I saw that, you know, generally the category, you know, the stocks that belong into the category of the market leaders tend to drop on that exhaustion day around 10% to 20%. Okay. So market leaders, and again, on the true exhaustion day, that's important. Okay. On the true exhaustion day, as we discussed here. Yeah. Okay. Tend to drop between 10% to 20%. Okay. Average, on average. And we will add some things here. Okay. The themes and random bursts, stocks, bursts tend to drop, you know, between 20 to 40%, okay? On average. And IPOs, and this can, you know, I'm only talking about the, you know, the true exhaustion day or max 1 to 2 days. This can unfold you know, go beyond.

Yes. Yeah. So you're looking at that one specific day.

Yeah. But on this specific setup, I'm not interested to hold it for long. Right. I'm not interested to stay long, short, you know, 2 weeks. Yeah. I just want this massive release of pressure in 1, 2 days. That's it. That's it. Yeah. Okay. So on IPOs, you know, these tend to drop between, you know, 20 to 40% again. Sorry, 20 to 30% for IPOs on average. Now, as we discussed before, We said something about extremes, right?

Yeah.

So when you have a move that is way beyond the threshold, hitting 2 times, 3 times, that is getting into the extreme. So what the extreme does, and, you know, is pushing the higher end of the limit.

Okay, understood.

And if it's too extreme, well, it's plus here a bit more. Okay, some deviation. So if you expect 10 to 20 and you have, you know, a really extreme move, you can get 20, but, you know, a deviation from here, not 35. Like you can say, These are rule of thumbs, right? Like you can say 23, 24%, okay? And the lower the market cap is as well, slightly more expectancy as well, okay? And the same goes here. You have a big prior move in the threshold. Maybe this goes into the higher end. And if it's also, you know, small market cap and extreme move, maybe 45 to 50, okay? And the same here. So this can extend a bit more based on the extremeness of the prior move as well as, you know, the market cap of the company. Okay. So just to go back into these two examples. Okay. Okay. To understand the expectancy again. So getting back to SMCI that we discussed, right? We have everything again to, you know, recap everything, right? All the filters in there, the volume, the, you know, the psychological number, everything is there. So next day is probable for a short, right? But we need This is more than the threshold, approaching 2 times the threshold, right? Yeah. So you can say, okay, like maybe it's closer to 20% as an expectancy. Doesn't mean that it's going to be direct. Again, this is a rule of thumb. It's how much can I expect? Okay. So you can say, yes, I can expect around 20%. All right. And it dropped around this percentage, slightly more of that number. Okay. Yeah. And then, you know, I mean, for the true exhaustion day, this is the true exhaustion day, right? Of course it can move a bit.

So 20% in terms of expectancy, what that means just to make it clear is We've hit, I think, $105, right? Roughly. Yeah. So 20%, meaning, in this case, if it's $105, it would be like $11 drop. Exactly. So 20%, sorry, it would be like $22. Yeah. Don't want to judge me for my maths.

So exactly from $107, if we go and you can see the column on the left, right? Yeah. We go down. This move was around 20. Around 23% to 24%. Okay. In a single day as well. So if you capture this around here, right, that would be perfect. And for the options guys, all right, that maybe this phenomenon happens on Thursday or Friday and want to take advantage of 1 DTE options or 0 DTE. If, you know, you can find some out of the money options, right, that are within the expectancy, not outside of it. Okay. So you can still have the chances, right? And it are, you know, really cheap, you can take advantage of this phenomenon as well as it happened here. Okay. So we can, you know, you can review many examples yourselves, right? There, this, there are a lot of examples around this phenomenon. Okay. And go and track these expectancy around the prior move, the structure, the market cap, and see that it usually fits the— Yeah.

And we have more trade examples later anyway. Once we've gone through the, the intraday actual entry element, We have more examples that we're going to go through also. But yeah, no, that shows it, highlights it perfectly as well.

So most of the times, as a higher level picture, you will see either the stock going up a bit and then finding some form of weakness, then approaching VWAP and then losing VWAP and then, okay, so, or it loses VWAP right away, but I'll do, you know, something that is, you know, more common. So you can have a stock and let's imagine this is a 1-minute timeframe, okay, that many people use. You can use the 5, okay? Just, you know, it will be more compressed. Yeah. So at some point the stock, you know, might perform its first lower lows, lower highs, okay? Which timeframe is this here? We can say it's 1 minute, okay? So the day starts, let's say, I can just put a line chart because candlesticks will be— Of course. Right? So at some point, you know, you get some lower lows, lower highs, you break the structure and then, you know, stock. And again, I'm, you know, trying to guide you through what the true exhaustion day looks like. So you, you know, you understand what happens. So when you see something, let's say different than this, maybe you can say, maybe this is not the true exhaustion day. So you can stop fighting the tape, let's say. Right? Yeah. So again, maybe we approach VWAP and let's actually draw VWAP, which is a really important indicator for this kind of setup. Okay. Like, I don't know many people, you had great guests talk about VWAP. You had Brian Shannon, right? Which is the perfect guest to talk about it, right? But just briefly, you know, since VWAP is being used by institutions as, you know, the price to, you know, to buy around. And what one other element is since, you know, I can use a moving average, right? I can use a 9-period moving average. You can use a 10-period moving average. Of course. We're both gonna see different things. You can use the 9 EMA, let's say exponential on the 1 minute, I can use it on the 5, different things. VWAP is universal, the same, you know, on all eyes. So it's a really nice factor of when, you know, of areas of weakness or strength. All right. So for this setup that it's amplified, an amplified phenomenon of fear with amplified emotions in this kind of setup. Yeah, of course. Okay. Monitoring VWAP, let's say for, in terms of its action, and it's really important.

Where would you be starting it from? The daily open price? Exactly, yeah.

I'm not using an anchored VWAP myself. I'm using the classic VWAP. So the action, what the true adjustment day looks, let's say in the 1-minute timeframe, then we can have some lower lows, then we might lose VWAP, and then we get a drop. And at some point, most of the times, we don't really go above VWAP massively. Okay. We might get 1 or 2 max touches around this, you know, zone, which, you know, this is what I call myself as code, kiss of death. Usually I want that. Like so many times, you know, we have this and I say, please go to VWAP, please go to VWAP because this is the place that I can add big. Amazing. I did really big size myself. And then, you know, might lose it and drop even more. That's the natural picture of what the true exhaustion day looks like. Okay. This is the check mark. Okay. So if you had, you know, everything is fulfilled in terms of the daily and all the structural and thresholds are there and bonus factors, but you end up seeing something, let's say, like this. Okay, you can have the exhaustion, let's say. Okay, and let's draw VWAP actually. So let's say this is VWAP. Okay. But then, you know, the price approaches VWAP and then goes above here. Even if it's, you know, below the the half a day and goes massively here and does multiple touches. Okay. This is not the day. All right. I don't want to see big, you know, movements above it. I want the price, if it approaches VWAP, to be 1 or 2 times max and stay relatively close to it. I'm not saying, you know, it can go here or here, but not really surpass, not build higher lows and break out of it massively. Okay. That's what you want to see. Okay.

Would there be any elements? So this is a 1-minute, for example. Would there be any elements, sorry, that you wouldn't want to see a closure on the 5-minute above VWAP or 15? Do you know what I mean? Like a higher timeframe close above this level, you would then cancel even if it's not massively away, or as long as you're literally just within and dancing around the area of VWAP, you're okay.

That's a nice question. And again, as I said, we can't put the market in a completely box. That's why I say most of the things that I do, as you see, is like—

Because by this point, we've already filtered a lot.

Yeah, it's, but you know, more broadly, that's the thing. You add a lot of things that are broad and then it's, you know, it's complex but simple at the same time, right? So it's not that I can say here, okay, this 5-minute, let's say, closes. If you get a breakout above the 5-minute, don't think about it. No, just, you know, visualize a proximity, okay? If it's still within the proximity, let's say, broadly as a filter, keep it in. If it goes way above, you know, the VWAP, and you can see it visually, just leave it. Of course. Okay. So I know that a lot of people want to use really, really specific filters to feel safe, but the markets don't work that way. Okay. In many places. Okay. And you know, it's more about the swing trading that I do that this makes sense, but I think it's all around. It's effective all around. Yeah, if you see higher lows here, breakouts, big moves above VWAP just excluded, probably it's not the true, true exhaustion there. This is something that you want to see. So let's discuss my entry tactics for this. So I'll put this and this is the next. All right. Yeah. So entry tactics. I use 3 entry tactics for this kind of setup. Okay, that are based around this kind of structure as well. Okay. So the price, let's say, can start in the day and we can put the 1-minute here again. You know, they move up. Okay. I try to monitor when it's the first time that it shows weakness. Weakness means, okay, it beats higher lows. It has, you know, this trend up in a smaller, you know, timeframe. Then what's the first time that it actually prints lower highs, lower lows? And I might initiate a short. Okay. At the first break of this structure. Now, since this is riskier, I might do it with less size. Yeah. Okay. Just to build a, build a discipline. Yeah. And if I want to mention my size personally, right, on my longs, imagine I'm using around 0.2 to 0.25% of my equity on every single trade. This is really small, right? People use 1%, 1.5%. On this specific setup, I use around 0.5%. Of my equity. But in the past, I was using even 1%. And I can use, again, now 1%, 1.5% because I have a really nice win rate on this setup in contrast to other things I do. Okay. But I just don't want to overdo it. It's a complementary setup for me, for my specific foundation, right? So again, since this has a higher fail rate because this can, you know, create more fake points, maybe do it with half your size. So if you're planning of risking, let's say, You move a $1 million account and let's say half your risk is $5,000, right? So, or $100,000 account, right? And your, let's say 0.5% is, you know, $500. Start with $250 as a risk here. Got you. Okay. And this can be your stop loss, the high of the day. Okay. You can use either this or the higher, you know, the prior, you know, lower high. Okay. I prefer on this to use the half day. Now, something important here. Okay. If the width of this, because this is actually your risk, okay? Let's say this is $3. Okay. But you have monitored the expectancy and you say on this setup, my expectancy is around $7. Okay. So do you take that trade? That's the question because—

Then you're looking at 1 to 2.

You're looking at maximum 1 to 2. Of course, it can go more, right? But it's not— Should you risk of being trapped in for liquidity issues or whatever on this setup? No. So it's when it's more than large, let's say, that I'm more interested. So if it was $3 and it's $12, okay, it's $15, $20, that's more, you know, when I get into it. So if this covers, you maybe use a lower stop instead of, you know, the full—

Okay, so let's say the lower one was $2 and the expected C is $6 or $7.

Maybe you can try it. It depends on your foundation, right? What's your average? Thing you're looking at. I'm more, you know, basing my system around asymmetry, right? I really want to hit that asymmetry, whatever I do, even if in this day trading environment. So it depends on you. But this is like the first setup that I use, okay? The first entry tactic. The second one is easier, okay? So as I said, sometimes you can have this, all right? But also, you know, you can start being sideways, going sideways, you know, on the day, and let's say this is VWAP, as well as it starts, right? I'm going to monitor this structure, and the first time it breaks that structure and VWAP itself, so let's say this is it, okay? Here, I might try initiate a short here, which is the break of the structure and VWAP itself. If it's trading sideways, let's say again, it's 1 minute, okay? Now for this, if you want to, if you trade the 5 minutes, you can monitor You know, what's the first red 5-minute candle? And you can short the break of the low of that first 5-minute red candle, right? First 5-minute red candle. Now, again, you short this structure, stop at the high of the day, okay? Monitor this width. Okay? Or if it's something like this, okay? So let's do the same example. And you have this break, then you wait for it to reach VWAP probably. So let's say this is VWAP. Okay. Now it would be more intense just for the example, right? So you can short here with a stop here. Okay. The break of VWAP. So you can start here. Gotcha. Right. And then get into here. Gotcha. And that would be 50-50. Or you can wait just for this and just go full in. Full in. Yeah. And the most important one. These are important, of course. Like, in terms of what I do, mostly this. I can start this. Like, I do everything, okay? But in terms of size, I'm more confident here than here. I can start here more slow, add here. And the other, as I said, is a VWAP reclaim. Okay, this one. Okay. So this is what I use if I miss the move. Okay, yeah, yeah. And I haven't, you know, I was monitoring but missed this. Like, it went down. I'm not going to chase it. I'm going to say, okay, I missed the move. I should look at the move. I know I need to chase this. I'm only in for the asymmetry. I lost my asymmetry. Yeah. Right? So let's wait for VWAP. Or if I'm already short, this is my place to add big. Okay? Understood. Because either you can use some of your profits to pass—

Because you might have got in here, here. Yeah. And then if you're feeling, because no doubt there's a lot of other elements obviously that come into it. In terms of, you know, maybe the theme, the feeling, the market, the feeling you get obviously after years of experience in terms of that pressure. Yeah, exactly. So, like, these elements then might come in where you've entered here, entered here, and then you get the kiss of death.

Yeah. And look at a way that you can do it, because myself, I'm not adding more risk here. I do it risk-free. Yeah. So you break even by this point. Yeah. And also that's an effective way to add. You can add massively. It depends on the structure. You can add massively on a stock and still be risk-free. Okay. And we can visualize, let's do it again because that's an interesting point. Okay. Let's say this happens, right? And then we attach again VWAP, we lose VWAP. Okay. We go down and then we slowly build back up and then this is VWAP and then we lose it again. Okay. So let's visualize it. That's something that, you know, it's really, so let's say you have something like that. All right. Now imagine that you started from here. Okay. This is your first position. Now I made a small mistake on VWAP here because it was slightly higher. Yeah. You see, amateur mistakes. So, and it can be even higher. Okay. But just for the example. And let's say you added a bit here as well. So let's say your average price is around here. Okay. Now, let's say you started with randomly saying 1,000 shares here. After the move goes already for me, at least 2.5 to 3 hours for this setup, I take some off. Okay. And then I usually put my stop to break even. What is the average price synthetically? Let's say it's around here. Okay. So I will put my stop here. If it approaches again, I'm stopped out, break even. I don't care. Right. You got to move here and then you get back again.

Do you, when you take some off, is there a percentage that you stick to or is it based on, again, the specific trade and how you feel?

Yeah. So I want to leave most of my size until the expectancy is reached. Okay. Or until the, let's say the end of the day, even if it's not the full expectancy. So again, I'm leaving stuff for randomness, even on the intraday spectrum. Okay. So you can take one third off, let's say, 2-hour short. Got you. Yeah, yeah. So look how you can use this setup here, okay? To add more massively without any extra risk, right? Simple stuff again. So let's say you have 1,000 shares. You take, let's say, 300 off. You're left with, you take here minus 300, right? Yeah. So this, you're left with 700. Yeah. Okay. Now, a question. Let's say you wanted to short here again. Okay. As a new position, right? I would put my stop at the— I didn't mention it here, right? I would put my stop at the high of that structure, right? On this setup. I want to short this structure, but, you know, I put my stop at the high of that small structure above VWAP. No matter how it materializes itself. Okay? So I want my new stop, and let's put it with red. I want my new stop to be this one. Okay. Yeah. So the question is, Riz, how many shares can I add on this point in order to bring my average price at this specific point? So no matter if this stops me out right here, I don't lose anything because I have already spent time without doing math, just visually, right? So you want to, you know, you probably would add here, which is a break of the structure. And you want to bring your new average price at the same level that your new stop would be if you just entered here freshly. So no matter if it stops you out, you lose nothing. You just sacrifice your earnings here. I would have said— No, yes, we have 700 in. Okay. How many? Without doing math. Without doing math. Yeah. Yeah. That's a beautiful thing.

I was going to say 1,300, right? Or 1,000.

Yeah. You're probably right. So like we can be more robust. Like now, you know, if we say that, uh, This is, let's see, the price that we entered. Okay. Yeah. This is a new price that we'd enter. If I add another 700, where synthetically my average price would have, would go around here, right? Yeah. It goes exactly in the middle, right? Of course. I have 700 here. I add 700 here. Synthetically, my average is here. Okay. But now I have 1,400. Okay. Yes. I can add another 1,400. And bring it again at the middle. So you're going to have 2,000+ probably shares. Interesting. So imagine 2,000+.

I was doing this the whole time. I was going, okay, we've taken 300 off because— Yeah, yeah, it's really simple. So here we could maybe do 1,300, you know, to add the extra 300, risk what we profited, but yours is way better.

Yeah, I mean, way better. It's synthetically you create, you know, a product in your mind just to not do the maths in simple maths, okay? But just to to add quickly and don't think about it, right? So you can have double the size of what you have here. Yeah. But with no risk. This is risk-free. And this is where usually when this accelerates that I make.

So when this comes down, when you reach the prior low, are you taking anything there?

Yes, of course you can take the same logic. Like since this is a new trade, let's say in your mind, you can take 2 to 3. But again, and if it reaches the expectancy, like If we reach that expectancy, all right, you can take most of your shares off. Okay. Because sometimes when you reach that expectancy, you know, things are, stocks do, you know, nothing after this intraday. You know, until we reach that expectancy before the VWAP, okay, you can leave some shares off to add again massively here because, you know, sometimes the expectancy can be a bit lower and even this distance can be good again to trade if you do it risk-free, right? So imagine we reach the expectancy here or close to the expectancy. Let's say the expectancy was here on this drop. Forget about this part. Yep. Okay. You haven't reached VWAP yet, the yen, to touch the yen. Okay. Still, you can say, okay, we're close. Let's add the yen here. Yeah. Since it's risk-free. Okay. To potentially capture this move, which is big again, a profit from, and then maybe we reach the expectancy, right? Yeah. But if you, you know, you reach it after VWAP, then you can close everything or most of it before. I'm fine with it. So these are kind of my entry tactics, really simple stuff again on the intraday level. So maybe we can go through one or two examples to, you know, start with summing this.

Of course, this is great though. Honestly, this is really good. Because one difference I'm noticing here with yourself is that I've seen other people where it's similar in terms of the setup, not as clear and as many steps as we've gone through today in terms of filters and stuff. However, one thing I've noticed with when they're breaking down entries and showing examples is that they will, you know, may enter here, may enter similar in that sense, but they'll enter like some here and some there. And, you know, and what I've noticed from when that happens is like, you know, they, it's much harder for them to be able to do something as strategic as this because the average price is kind of all over the place, you know? Yeah, I know. And I find that interesting. You see it from like the stock screenshots, of entries, right? There's entries all over the place. Is that something that you completely avoid and you just have these very specific, these 3 specific areas of entry?

Yeah, I don't disagree with it because if you're really relying on that setup for your foundation and it's a big part, right? Maybe you need to really pyramid into that stuff. Okay. Got you. And, you know, you add the, when I was day trading, for example, massively back in the days, on all these kinds of small pullbacks, I was Putting more size probably, right? But, you know, at the end of the day, you don't want to overdo it because there are so many times that you can choke the trade. Okay. And you might lose a really beautiful move. So if you have to do it and add on this kind of pullbacks, try to be slightly along the VWAP because when, if it goes back into that zone, you need to add again or perform a new trade. You don't want to choke the trade out. Right. So yes, I was doing that stuff. I don't disagree with that stuff. It depends on, as I said, this setup for me nowadays, it's a more complementary setup. Is that you say?

Yeah. Yeah. So this just kind of adds an X percentage per year to your return, but you're focused on obviously the long term.

Yeah. And I want to keep it simple. Right. And it's, you know, it's as it is, it's really simple. It's complex, simple kind of, but no, it's simple.

But it's complex in terms of you have your filters, but that complexity is what allows it to be simple. If again, we can follow that discipline and the rules as we talked about. Amazing. Perfect. Yeah.

So to finish this off, it would be nice to have an example of maybe MSTR that we reviewed or something else that you might prefer to go, you know, as a market replay in the day and see this kind of entry tactics unfold and where we could add and how much you can potentially make from something. And you know, everyone back at home, you can go through, you know, quantum computing names, right? SMCI that we discussed, or VFS that was an IPO, Palantir when it first started. Like there are so many examples that you can go and review yourselves, right? Just monitor the criteria, monitor the threshold.

Apply those filters that we talked about.

Yeah, go into the day and see all these things kind of unfold, right? Is it worth to take that trade? Was it, you know, how much could I make from this trade? So let's use a market replay to go. Do you want to do MSTR maybe?

Microsoft? Yeah, let's do it.

Yeah, let's do it. We agreed before, right, that this could be, you know, later on after, you know, the last, this was, you know, the structure, the escape, the slope, right? And then here we agreed that this is, you know, through the volume, first time hitting 500, accelerated from 3 days, gap up as well here. The next day could be a probable parabolic short, right? An exhaustion day. So if we add everything that we discussed, okay, since this, you know, due to extremeness of the move and hitting, you know, bonus factors as well, can we expect maybe a 20% drop? Yeah, maybe we can, right? So from $500, if we go down, let's say around 20%, we can say, okay, maybe $380, $390 is maybe probable, right? Yeah. Or for, you know, close to 400, let's say. So let's go into, you know, a market replay. And this day was, as we agreed, the 21st of November, 2024. Okay. Big favor for the editor here, because as I press this, the note showed up. Okay. As I press the button, maybe you can, yeah, for the people maybe to No, it's okay. So we go to MSTR on 21st of November, 2024. So let's put MSTR here as a ticker. And we can go, you know, minute by minute to see, you know, this is not adjusted, split adjusted, right? But probably the 1-minute time frame will show exactly as it was back then, back in time, right? So let's you know, start unfolding, you know, the price here. Okay. So I can zoom in to see where possibly we could, you know, start a position on MSTR based on the entry tactic. So could probably this be the first kind of short as we break the structure and we go sideways into the day into VWAP? That could be one, right? Yeah. Let's say you might, you know, we can do that. Let's actually Let's do with shares, all right? So again, let's actually do it, all right? Calculate the full position and do the whole trade. So let's say this is a structure again, right? If we break kind of this structure, okay, here, and we build some lower highs here, and we lose VWAP again here, okay? Maybe we can initiate the position, right? So if I say that I want to enter at, let's say, 5, $5.25. Okay? I can put my stop around $5.35, right? That's a $10 stop. Yeah. Okay. So if you're risking, let's say your capital is $100,000, a million, 10 million, it doesn't matter. Okay, let's say $100,000. If you do it the way I do it, okay, and we can do it with 1% here. Okay. And maybe some people risk 1% or let's play it safely. What do you want? Safely or? 1% is fine.

Yeah. Easy number to work with.

Yeah. So 1%, right? 1% out of $100,000. The risk is $1,000 risk. Okay. So if you have $1,000 risk and the width of your stop is $10, how many shares can you buy on this kind of chart here? Right. Max 100 shares. Right. So you can buy 100 shares and if it hits your stop, which is $10 stop, you're going to lose your risk, which is $1,000. Simple stuff. Right. Yeah. So if we put a stop, let's say order at 5, at the break of this structure, let's say $524.99 or something. Okay. $524.99. And we go with 100 shares, right? Yep. So, okay. So if I continue this, so you see the order, for example, here, and this is a nice thing to do, right? I think there are way many alternatives, but if you're a day trader to go back in time and do your day trades.

Simulate in your eyes.

Yeah.

Get those reps in, as they say. Exactly.

And simulate stuff, what you could do differently, where you could do that differently, right?

This is how you develop your confidence in the strategy, as well as your filters. You start to say, you start to develop your own filters and your own rules.

Yeah, exactly, right? And I was using similar tools to this, you know, back in my day trading days. Nowadays, I don't use them because I'm more long-term, right? But this is, you know, one way I refined my skills back then. Back then. So what I forgot to mention is, you know, before we do that, as we said, we need to have a $10 stop, right? And the expectancy is probably more than $100. So it's worth the trade, right? Yes. We have 10 to 1, 12 to 1, 13 to 1 probably. And we had to put the stop loss here, right? If it takes out, takes us out, we're out. And what I forgot also to mention is I only give for that specific day 2 attempts. It thumps me out one time, I can try Once more within the day. Got you. If it stops me out again, I'm out. I just delete the teacher. I don't want to see it again. That ego thing, right? For this kind of setups only. So right now we're in, right? So as you see right now, we're 1 to 1. We're $1,000, you know, worth $1,000 plus, right? From this kind of risk. So if this goes around to, you know, $3,000 profit in this kind of term or 3 to 1, You can cut some off, right? So now I have it in really, you know, high speed. So right now we hit around 3 to 1. Okay. Yes. So can you take, let's say, 30 shares off? Yep. Okay. So we can take 30 shares off, right? Out of the 100. Okay. So let's say this. So we're, we still have 70 shares with an average of this price, right? Yeah. Now what can you do? Either I will leave this to full expectancy. Right? Or I wish, all right? I say, please go to VWAP because I want to add. I don't care this, you know, of course, if it goes to expectancy, that's a good thing. But if you cannot massively, that's where the outlier trades in this kind of setup happen. Okay. And most of the times, as I said, the natural occurrence is for that VWAP to be, you know, reclaimed again. Okay. So let's see. I remember this, you know, this kind of, setup. All right. So I can, you know, go a bit later here and zoom out just to see what I mean. Okay. Okay. Yeah. See it. So we still haven't hit the expectancy, right? We're at $400. We hit $420. Okay. So as we said, we have maybe some room more. Oh, now I rebuilt it. Okay. Okay. That's bad. But Just for you to see the add, what I mean by the add, okay? So let's say you have still 70 shares, okay? And you notice that, okay, this kind of climbs up. There we go, yeah. And you're at this point, all right?

So at this point we've gone, the low was about 425, 426.

And we set our expectancies around these levels below. Yeah, about 400, yeah. Yeah, or something. So we haven't hit the full expectancy yet as well, all right? Or let's say we are close. And our average price is up here from where we started. Now, as we approach VWAP, if I saw this go, you know, here and here up, would I want to add? No. Because the chances are lower. I want this to stick around here if I want to add.

Is there any sort of like price range you look at?

Or is that what you just, when you look at it?

It's, you know, this is where the intuition subjectiveness. Yes, but it's not so hard, right?

Like put some deviation in your mind around here. You understand when this thing looks you know, really, like if it holds that base and the breakout.

When you say price action as well. Yeah. You know, if you're seeing really strong closes bullish-wise. Yeah.

And higher lows and breakouts above VWAP, which is a sign of strength, right? So let's see what happens here, for example. If it loses that structure again, I want to add. Now, how much can I add? How can I supercharge this move, right? So let's do it. Actually, let's do it. Can I do that? Yeah, probably can. So let's say our average price is here, this price. We know that. All right. This is around the level. Let's visualize it. We don't know yet. Let's say we wanted to short on this level. Yeah. But let's say our average price, we want it to be around this level. Okay. Okay. How much can I add? Probably.

So we have 70 right now that's break-even. So similar to our earlier example, would it be—

Maybe at least 2 times what we have already, right?

Yeah. So 100.

You don't need to just visualize it, but wait for the structure itself. I'm just giving you some hints when it emerges and when you are more sure, right? You don't want to add when things, you know, are not looking professional. Of course. I see that, then we might lose the VWAP. Yeah. Okay, let's see. Okay, so now I can add here, right? Or wait a bit, right? Like this structure, now I have the speed 1 minute per second, right? You know, this, you had time 5 minutes to see, okay, it rejected VWAP, it's trading again below, I can step in here, right? Maybe. So let's say you have to put your stop loss, your new stop loss here. And you want your new synthetic average price to be here. So let's do without any calculations, how much can you add from the 70 shares you have? Right? So let's say you could, you want to add here, 3D does a new trade. Your average price is here and you want your new synthetic average price to be here. So it's risk-free again. So if I add another 70 shares, it'll be up there. It will be the middle of this. So it will be around here. Yeah. Okay. So if I had another 140 shares now, It will be around here, probably. So I can add around 230, maybe, shares without any complex math. So I can keep my average price around here and still be cool, right? But 230 shares are a lot, okay? And still risk-free. So let's actually do it. Let's go maybe 1 minute back. Okay, so let's say you, from here, okay, you, I want to see how, where the average price can, will go, right? So let's press, let's put it on lower speed first. So I can initiate the trade probably. Do you see where the average price went? Just above, yeah. So I can add even more. Okay. Probably. So let's add another 80. Okay. Now look at this size. Now we're 300. Okay. And let's say we still keep it at 350 or something, 330. All right. Now that's a big size. Okay. So let's reveal it. Actually, let's go by the end of the day to see. What this trade could do for you. We already got a partial before, right? And you just leave for the max expectancy. Have we reached the expectancy yet? We're still at 4.8 or something, right? Yeah. So we're there. This is where you sell. So do you see this trade? This is $30,000. And your account was $100,000. So that's a 30% increase in a day. So that's the optimal scenario, of course. You might do some wrong cuts, you might not start that size, but you can see the potential of 5, 6, 7, 10 moves like this in a year. And we haven't gone through, we can go through examples of quantum computing names and everything from this year, the previous year. It's 5, as I said, 5% move, 6%, 10%. And you didn't decide to over-risk either. Yeah, it was 1% risk and break-even after the first partial. So everything that came after that was risk-free.

Very interesting because, you know, when I've seen these examples, again, not as many filters as we talked about earlier, etc., but when I've seen these examples shared, a lot of people go, oh, this is the setup, I go all in.

No, no, no.

They go really heavy size. You know, how come you don't do that? How can you still keep— you elevate the risk, yes, but only in respect to the risk that you usually use.

You have to understand that, as I said, Everything is just a probability. There's not a certainty, all right? You can't risk your whole career in any single trade. Okay? And even 1% is a stretch. As I said, I'm risking 0.5% myself. Yeah. Because I understand the risks. Okay? And it's a complementary setup for me. You don't need to overdo it to have a, you know, a really good performance in a year. As I showed you this, you know, with 1% risk, which relatively it's okay for day traders. It might be, you know, you know, big for some other traders. Of course. Yeah. You know, it's a, let's say, a risk that has been massively used. Okay. So you see that even with that, okay, from a single trade, one time per year, you can achieve 10, 15, 20% gains. What's the average benchmark gains? But what do you want to achieve actually from this market? How smart do you think you are? Okay. So you need to adjust your goals, with who you are, your skills, and also, you know, what happens on average. So I think that, you know, a performance of, you know, 80%, 100% is really, really, really, really good. And you can achieve that only by this setup, you know, through a year with minimal risk. Okay. And you need to understand if you go for more, because I was in a phase that I really pushed the gas in the past. The competition was one of these phases and I could even overdo it. You need to understand the risks that you're taking, okay? The game is about longevity. Okay, that's what you have to repeat over and over in your mind. Longevity is the game, okay? So that's how you don't overdo it and you respect your risks and understand, you know, you never want to have a traumatic experience. You want to live the other day, okay?

I think some people chase that dopamine, right? That thrill that comes with obviously, you know, sort of stepping up the gas and etc. Yeah, and I get it. Yeah, I mean, we all get it. Longevity is key. Should we take a look at just one more entry example? It doesn't have to be in terms of simulated, but just maybe the SME. Yeah, what, SMCI? SMCI, yeah.

We can do something else like, you know, tubing.

Anything, yeah.

Do you see, Cem? I didn't even remember that, right? Do you see, Cem, the action that we discussed? It's picture perfect, right? Drop. Kiss of Death, then again drop, right? So you wanted another tactic. I'm trying to remember other tactics. You know, what tactic should we use? Like the first one? What do you mean? I mean, do you want to go over an example as a whole or just to review a simple— Just the entry.

Oh, okay, perfect. Yeah, it doesn't even have to be, like I said, simulated. I don't know if the other platform lets you look at the 1-minute. It's more so just to show, hey, these rules that we talked about, here's another example and so on.

Yeah, yeah. So we can do this one. Yeah. It's a thematic one and review the entries again. Yeah, perfect. So I need to stop the recording here. No, no, because this probably— No, no, it's fine. Keep it? Yeah. Okay.

So the least amount of recordings we could have ever done. No, but it's fine because they will keep it. They'll edit out any chunks and whatever. Okay, so we were here.

So maybe let's do another example about, you know, where you'd, let's say, the market leaders, let's do a thematic one, right? Like a Qubit that we discussed before. Okay, and again, it's your homework to do, you know, go back into that stuff and review them, guys, right? So we agree that this is a textbook looting setup, right? So next day, it could be a nice day. Now, if we go in a add everything up, that was, you know, where is the threshold, right? So it's a thematic move. So we can expect around, you know, maybe a 30% drop, 30% plus maybe drop for sure, right? So let's go into the next day after this, which is the 19th of December, 2024, which indeed happened here, right? And let's go into Let's go into the simulator to see that. All right. So this is, we need to cut that part because I revealed it already. Sorry, I need to, we're back here, right?

Oh, don't worry.

So let's go to 19th of December 2024 and put a qubit here. You can go back on the start to review some of the entries, right? I had to close the MSTR from here to start fresh. So let's zoom in. Now, you see immediate weakness starting off from Qubit from the 1-minute. That gap down, right? Yeah, right? The day starts and it's, you know, you start with a gap down. So much of the expectancy is already absorbed. It might be worth taking some trades, but And the day starts with that drop. So do you do anything? No, you just wait. If you can find a setup, okay, that is tight enough and the expectancy, you know, still has room, then you can try it, okay? Yeah. So let's, or maybe wait for VWAP later on. It depends on how, you know, it materializes itself in a day, all right? So let's increase the speed here and see if it was worth at any given point. That's why I said I want to show you the setup, both if you are long, okay, take a nice, you know, sell. Exactly. If the expectancy is there and if it materializes good inside the day, then maybe it's worth probably a short. Okay. So that's a first, let's say, reclaim short, reclaim to the VWAP. Can you take a short like that and stop here? That would be one of my entries, right? Exactly. Shorter time reclaimed to the VWAP, okay? That could be one, okay? If it stops me out here— You still have one opportunity. I have only one opportunity, okay, to do it. So probably that would be, you know, the entry here, right? Entry here, short here. Let's say we visualize we're in. Yeah. Okay? Now, the only time now probably we're starting to, you know, to reach the expectancy Yeah. The only time that I can, you know, get in is only if I have one and only loss again of the VWAP reclaim after this massive drop. That's the only thing. I'm not doing anything. Imagine we are here, okay? Yeah. Again, I'm going to sell at 3, you know, 2.5 to 3 hours. The partial move the stop to break even around here. I'm not yet, you know, stopped because the partial would be around here, right? So you wait, you wait, you wait, and you actually, here, you know, we got close to VWAP, we haven't yet reached it. Gotcha. So we wait.

You need to, yeah, doesn't matter if it's that close, it has to reclaim, it has to touch.

Yeah, I want that reclaim, okay? So for example, I can, you know, let's go deeper to see if there was any, okay, so here we cut the VWAP, right? And as I say, I don't want to see extremely aggression, I don't want to see something going over here, right? I mean, you can expect some movements, all right? But I don't want like aggression, okay? So let's see. And you can only enter if it loses. So far, based on what we discussed about the natural view of the intraday action, does this fit the action? Weakness all day, minimal touches to the VWAP. This is the first official big reclaim after the short term here. Okay, here we lost again the VWAP. This was not extremely aggressive. It's a deviation that can handle seeing, you know, this candle here. So you can actually short again here, bring, you know, your average around this zone here. Okay, and let's go into the end of the day. You know, that's the full move. So again, as a picture, do you see how it again complements what we said. This is the true picture, intraday of the exhaustion day. Of course, not everything is going to look the same as something else.

So like with this one, still fits the criteria and everything is met and there are trade opportunities too in this example. But the difference being that we gap down. So it changes the dynamic.

The difference is we gap down, as you said first.

And even on the day, if this was in real time, that gap down would change, like, you know, our general feel as well. You don't want it.

I prefer gap ups because it's more expectancy for me, right? So that's why I said this setup, take it, see if it fits on your foundation, okay? You can use it if you're long to sell more effectively. You can skin the cat with options, like whatever. Like see if you can take anything of this framework and put some parts into your foundation Okay, to reinforce it. Okay.

It was similar to what you were saying. Well, we mentioned silver earlier, but we were talking about how everything met criteria-wise. Yeah. You even put out the— was it a tweet or post, right? Saying how tomorrow or the next day or two should expect X, Y, and Z. Yeah. And it happened.

Yeah, it happened. Yeah.

But what does it mean for your trading side? Exactly.

So, you know, as I said, we have this expectancy to know if we should, you know, go in massively or not, right? So the structure was there. Of course, if you see my post, I said, because I know this is intuition also, right? I know that commodities tend to make it hard, okay? Meaning oil or silver or other assets and commodities, right? So everything worked, okay? You know, the move worked exactly the next day after I posted, you know, the tweet up there.

Should we take a look at the—

Yeah, yeah, we can offer the chart here, right? And the move happened, but It all happened, you know, on SLV as a proxy of the silver, right? You can trade futures, you can do whatever you want, but all this move, even if we were right about what could happen, even if we were right about what could happen, right? This is the post here, okay? So do you see this big extension here? Do you see this big increase in volume? Everything that I talked about, and this is extremely recent. Yes, silver had its biggest drop in a single day in its history that day here, if you go and open the futures, whatever, right? But, you know, could you actually profit a lot from it the next day as you could? No. So structurally, it makes sense. How it made sense? When I made that post, if someone was heavily long on that silver and maybe he piled up really hard here, that's what The mistake is, okay, so if you're a day trader and you're thinking, you're buying into that narrative and you go really big on where you shouldn't, okay, that's where trouble can come ahead. So this was really painful for the late buyers. So again, to get back to your point, nothing ever happens in the market as books write it. I tried my best to show what happens on average, not the perfect looking things. Exactly. What happens on average, but you have to put your intuition and your experience into play of where you should hit the gas or where you should, you know, withdraw.

So just to finish up, in regards to, as we mentioned a couple of times now, the traders and the viewers should go away and apply this themselves, go and look at the tickers, look at these rules and apply these filters so that they can see, you know, the different rules playing out, right? And how these filters that we've talked about actually apply to the market. Are there any tickers other than the ones that we've gone over already that, you know, you would recommend people to go look at so that they can do that homework essentially? Yeah, for sure.

Like what everyone should do, all right? And I suggest that to everyone is, no matter what your framework is, all right? Your style, swing trading, day trading, go over the best performing tickers in history, okay? Things that accelerated 300% in a short amount of time. You know, 500% in 2-3 days. And nowadays it's so easy to do. Okay, like in the past you have to do everything manually to find all that stuff. Now you can write some code with some, you know, help of ChatGPT or other, you know, Gemini, Perplexity, whatever, right? Write some code, use a service provider and find all the teachers. Okay, so the example, that's what I did as well in my recent studies, right? You can find countless of examples. The more you study, the better you will be. Okay? And then listen to yourself. What is my foundation? I'm mainly going long. I'm a day trader. Whatever I do, can I fit into some of these parts that Mario has taught me into my framework or has spoken about? Right? So study as much as you can. All right? It's so easy nowadays. It's the only solution for confidence. It's the only solution for trust. It's the only solution for true clarity in the market. True mastery. Study all that stuff and see how they can fit in your framework. Okay. And the examples are countless. You can never stop if you want. Right. Either. Um, yeah, so that's about it. I hope this was helpful.

That was incredible. Absolutely incredible. And thank you for going into so much detail and, uh, you know, it was a first for us going into examples coming back, but I loved it. I'm sure the audience loved it. Everyone drop a comment with your biggest takeaway from this episode. Any questions that came to mind, drop them in the comments below as well. Links for Marius will be in the description, so make sure you go check him out. True honor to be able to go through in such depth into the Parabolic Short. But other episodes are on screen right now. Hit like, hit subscribe if you haven't already. I'm sure you already have. But until next time, everyone, this has been Chart Fanatics. Take care.